SMT. Annapurna Maheshwari, Indore V. THE ITO-4(1), Indore

ITA 252/IND/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4375 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 15-10-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 18-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: S UMIT NEEMA SR ADV
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources; Salary income; Earning of tax free income; Question of law; Cost of acquisition; Benefit of exemption
• Section: 40A(3); 143(3); 68; 144

Judgement Text

ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.315/IND/2012 & 252/IND/2016 ASSESSMENT YEARS 2008-09 & 2010-11 ITA NO.53/IND/2014 ASSESSMENT YEAR 2008-09 REVENUE BY S HRI P.K. MITRA, SR.DR ASSESSEE BY S/ SHRI S UMIT NEEMA, SR.ADV & PANKAJ SHAH,CA DATE OF HEARING 15.10. 2018 DATE OF PRONOUNCEMENT 31 .10 .2018 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED THREE APPEALS ARE FILED AT THE INSTANCE OF DIFFERENT ASSESSEES. ITA NO.315/IND/2012 & ITA NO.2 52/IND/2016 SMT. ANNAPURNA MAHESHWARI, 155, ANOOP NAGAR, INDORE VS. ACIT 4(1), INODRE ( APPELLANT ) (RESPONDENT ) PAN NO. A CAPM7243D SHRI PRADEEP MAHESHWARI HUF 155, ANOOP NAGAR, INDORE VS. ACIT 3 (1), INODRE ( APPELLANT ) (RESPONDENT ) PAN NO. A AIHP8501M ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 2 IN THE CASE OF SMT. ANNAPURNA MAHESHWARI PERTAINING TO ASSESSMENT YEAR 2008-09 & 2010-11. IS DIRECTED AGAI NST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-II (IN SHORT LD.CIT(A)], INDORE DATED 24.1.2012 & LD. CIT(A)-22 (HOLDING CO NCURRENT JURISDICATION OF CIT(A), INDORE-I DATED 11.12.2010 & ITA NO.53/IND/2014 IN THE CASE OF SHRI PRADEEP MAHDESH WARI HUF RELATING TO ASSESSMENT YEAR 2008-09 LD. COMMISSION ER OF INCOME TAX (APPEALS)-I, INDORE DATED 23.10.2013 WHICH ARE ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 30.12.2010 & 15.03.2013 & 28.12.2010 RESPECT IVELY FRAMED BY ACIT-4(1) , ITO 4(1) & ACIT-3(1), INDORE. 2. THE RELEVANT GROUNDS IN EACH THREE APPEALS READ S AS FOLLOWS; I.T.A. NO.315/IND/ 2012 IN RESPECT OF SMT. ANNAPURN A MAHESHWARI PERTAINING TO ASSESSMENT YEAR 2008-09 1. THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO OF TREATING THE SHORT TERM CAPITAL GAIN OF RS. 41,29,5 12/- TAXABLE U/S LL1A @ 10% AS INCOME FROM OTHER SOURCES BY HOLDING THESE T RANSACTIONS AS SHAM AND BOGUS. THAT ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW THESE TRANSACTIONS ARE GENUINE AND THE TREATMEN T OF THE SAID TRANSACTION BY THE ASSESSING OFFICER IS WRONG AND B AD IN LAW AND IT IS PRAYED THAT THE SHORT TERM CAPITAL GAIN OF RS.41,29 ,512/- BE ACCEPTED AS SUCH. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER , AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 3 I.T.A. NO.252/IND/ 2016 IN RESPECT OF SMT. ANNAPURN A MAHESHWARI PERTAINING TO ASSESSMENT YEAR 2010-11 1. THAT THE LEARNED CIT (A) ERRED IN UPHOLDING THE ACTION OF THE AO OF TREATING AND ADDING SHORT TERM CAPITAL GAIN OFFERED OF RS.28,31,383/- AS INCOME FROM UNDISCLOSED SOURCES. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE SAID TREA TMENT/ADDITION IS WRONG AND IT IS PRAYED THAT THE SHORT TERM CAPITAL GAIN BE ACCEPTED AS SUCH. 2. THAT THE LEARNED CIT(A) ERRED IN TREATING SHORT TERM CAPITAL GAIN OFFERED OF RS.2,49,406/- AS TRADING PROFIT. THAT ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE SAID TREA TMENT/ADDITION IS WRONG AND IT IS PRAYED THAT THE SHORT TERM CAPITAL GAIN BE ACCEPTED AS SUCH. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER , AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE . GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. I.T.A. NO.53/IND/2014 IN RESPECT SHRI PRADEEP MAHES HWARI HUF, PERTAINING TO ASSESSMENT YEAR 2008-09 1. THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO OF TREATING THE SHORT TERM CAPITAL GAIN OF RS. 23,80,7 47/- TAXABLE U/S LLLA @ 10% AS UNEXPLAINED CREDITS U/S 68 BY HOLDING THESE TRANSACTIONS AS SHAM AND BOGUS. THAT ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW THESE TRANSACTIONS ARE GENUINE AND THE TREATMEN T OF THE SAID TRANSACTION BY THE ASSESSING OFFICER AS SHAM AND BO GUS IS WRONG, BAD IN LAW AND THE ADDITION MADE U/S 68 IS PATENTLY WRONG AND IT IS PRAYED THAT THE ADDITION MAY-VERY KINDLY BE DELETED AND THE SHO RT TERM CAPITAL GAIN OF RS.23,80,747/- BE ACCEPTED AS SUCH. 2. THAT THE LEARNED CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO OF TREATING THE LONG TERM CAPITAL GAIN OF RS. 17,23,05 2/- CLAIMED EXEMPT U/S 10(38) AS UNEXPLAINED CREDITS U/S 68 BY HOLDING THE SE TRANSACTIONS AS SHAM AND BOGUS. THAT ON THE FACTS AND IN THE CIRCUM STANCES OF THE CASE AND IN LAW THESE TRANSACTIONS ARE GENUINE AND THE T REATMENT OF THE SAID TRANSACTION BY THE ASSESSING OFFICER AS SHAM AND BO GUS IS WRONG, BAD IN LAW AND THE ADDITION MADE U/S 68 IS PATENTLY WRONG AND IT IS PRAYED THAT THE ADDITION MAY VERY KINDLY BE DELETED AND THE EXE MPT LONG TERM CAPITAL ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 4 GAIN OF RS.17,23,052/- BE ACCEPTED AS SUCH. 3. THAT THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER , AMEND, MODIFY, SUBSTITUTE, DELETE AND/OR RESCIND ALL OR ANY OF THE GROUNDS OF APPEAL ON OR BEFORE FINAL HEARING, IF NECESSITY SO ARISES. 3. FROM PERUSAL OF THE ABOVE GROUNDS WE FIND THAT T HE COMMON ISSUE IS REGARDING TREATING THE TRANSACTION GIVING ARISE TO SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN FROM P URCHASE/SALE OF SHARES AS BOGUS AND SHAM AND TAXING THEM AS UNEX PLAINED CREDIT U/S 68 OF THE ACT BY BOTH THE LOWER AUTHORIT IES. AS THE ISSUES RAISED ARE COMMON THESE THREE APPEALS WERE HEARD TO GETHER AND BEING DISPOSED OFF BY THIS COMMON ORDER FOR SAKE OF CONVENIENCE AND BREVITY. 4. FOR THE PURPOSE OF ADJUDICATION WE WILL TAKE UP THE FACTS OF SMT. ANNAPURNA MAHESHWARI FOR ASSESSMENT YEAR 2008- 09 RELATING TO I.T.A. NO.315/IND/2012 AND OUR DECISION ON THE C OMMON ISSUE REFERRED ABOVE SHALL BE APPLIED ON THE REMAINING TW O APPEALS TO BE DEALT IN FORTHCOMING PARAGRAPHS. 5. BRIEF FACTS RELATING TO SMT. ANNAPURNA MAHESHWAR I FOR ASSESSMENT YEAR 2008-09 AS CULLED OUT FROM THE RECO RDS ARE THAT ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 5 THE ASSESSEE IS AN INDIVIDUAL HAVING REGULAR SOURCE OF INCOME FROM SALARY, HOUSE PROPERTY, CAPITAL GAIN AND INCOME FRO M OTHER SOURCES. INCOME OF RS.46,16,412/- DECLARED IN THE INCOME TAX RETURN SUBMITTED ON 31.07.2010. RETURN FILED WERE PROCESS ED U/S 143(1). CASE SELECTED FOR SCRUTINY. STATUTORY NOTICE U/S 1 43(2) OF THE ACT DULY SERVED UPON THE ASSESSEE. WHILE SCRUTINIZING THE DETAILS THE LEARNED ASSESSING OFFICER (IN SHORT `LD.A.O) OBSER VED THAT SHORT TERM CAPITAL GAIN OF RS.41,29,512/- HAS BEEN SHOWN FROM PURCHASE AND SALE OF EQUITY SHARES OF IFCI LTD. CO NTRACT NOTE FOR PURCHASE OF SHARES, DETAILS OF PAYMENTS MADE FOR TH E PURCHASE, NECESSARY DOCUMENTS EVIDENCING SALE OF SHARES AND T HE PAYMENTS RECEIVED THEREOF WERE FILED. LD.A.O HOWEVER NOTICE D THAT THERE WAS A SIGNIFICANT GAP BETWEEN THE DATE OF PURCHASE THRO UGH CONTRACT NOTE AND THE PAYMENTS MADE TO THE BROKER. ONE OF T HE INSTANCE HE NOTED WAS THAT THE CONTRACT NOTE DATED 19.7.2016 FO R PURCHASE OF 31,000 EQUITY SHARES OF IFCI LTD @ RS.8.18 AND THE AMOUNT WAS RS.2,86,412/-. THE PAYMENT FOR THIS PURCHASE WAS M ADE ON 4.5.2007 I.E. ALMOST AFTER 10 MONTHS, WHICH RAISED THE SUSPICION IN HIS MIND ABOUT THE GENUINENESS OF THE PURCHASE TRA NSACTIONS. EVEN THOUGH NECESSARY INGREDIENTS OF GENUINE PURCHA SE WERE ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 6 PROVIDED BY THE ASSESSEE BUT SHE FAILED TO GET ANY FAVOUR FROM THE LD.A.O, AND HE TREATED THE ALLEGED SHORT LONG TERM CAPITAL GAIN AT RS.41,29,512/- AS INCOME FROM OTHER SOURCES AND ASS ESSED TOTAL INCOME OF RS.46,16,410/-. 6. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LD .CIT(A) BUT FAILED TO SUCCEED AS THE VIEW TAKEN BY THE LD.A.O W AS CONFIRMED BY LD.CIT(A) OBSERVING AS FOLLOWS; 4.3 GROUND NO.2 TO 6 ARE DIRECTED AGAINST AO'S ACT ION IN HOLDING THE CLAIM OF STCG AS IN-GENUINE AND TREATING SUCH INCOME AS I NCOME FROM UNDISCLOSED SOURCES. IN VIEW OF FACTUAL POSITION, A S NOTED ABOVE, AND OBLIVIOUS INFERENCES EMERGING THE AO'S ACTION IS FO UND TO BE FULLY JUSTIFIED AND HAS TO BE NECESSARILY APPROVED KEEPING IN VIEW THE FURTHER DISCUSSION MADE HERE IN AFTER. 4.3.1 IT HAS TO BE APPRECIATED THAT THE REVENUE AUT HORITIES ARE FUNCTIONING IN A DEMOCRATIC SET-UP AND ARE NOT DISCHARGING THEI R DUTIES IN A POLICE STATE WHEREBY THEY CAN FORCE THE ASSESEE/APPELLANT AND CO - CONSPIRATORS TO ADMIT THE TRUTH OF THE TRANSACTIONS THOUGH THE SAME APPEARS TO BE OBVIOUS AND APPARENT AND IT IS USUAL ON THE PART OF THE APP ELLANT /ASSESSEE AND THERE ARE CO- CONSPIRATORS/ABETTOR AND THEN FOR THE AR TO CLAIM AND CONTEND THAT THERE IS NO DIRECT EVIDENCE THAT SUCH TRANSACTIONS WERE NOT GENUINE AND THE TRANSACTIONS WERE SUPPORTED BY VALI D DOCUMENTS AND WERE CARRIED OUT THROUGH BANKING CHANNEL AND HENCE SHOULD BE ACCEPTED AS GENUINE KNOWING-FULLY WELL THAT SUCH TRANSACTION S WERE NOT GENUINE. THE AFORESAID FACTS HAVE TO BE AGAIN EXAMINED AND A NALYZED WITH APPRECIATION OF THE CONSTRAINTS AND LIMITATIONS WIT HIN WHICH THE AO HAS TO ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 7 FUNCTION AND OPERATE. FIRSTLY, THESE TRANSACTIONS W HICH ARE NORMALLY WELL- DOCUMENTED AND ARE SECRETLY NEGOTIATED ARE SCRUTINI ZED BY THE AO AFTER A SUFFICIENT GAP OF TIME I.E. NEARLY TWO YEARS FROM T HE END OF THE RELEVANT F.Y AND THEN WHEN THE APPELLANT/ASSESSEE AND THE OTHER PERSONS ABETTING THE ASSESEE IN SUCH MANIPULATION ARE CONFRONTED BY THE AO, THERE IS USUAL TENDENCY TO EVADE THE REPLIES OR IN THE LEAST TO DE LAY THE REPLIES. THE AO AGAIN HAS TO FINALIZE THE PROCEEDINGS WITHIN THE ST ATUTORY LIMITATION INVOLVED AND THEN HE CANNOT DEVOTE THE ENTIRE TIME AVAILABLE AT HIS DISPOSAL TO A PARTICULAR CASE. HERE, IT WILL BE PER TINENT TO MAKE REFERENCE TO THE OBSERVATION OF THE HON'BLE SUPREME COURT IN THE CASE OF SUMATI DAYAL V. CIT 214 ITR 8()L(SC) MADE IN THE CONTEXT OF SALE AND PURCHASE TRANSACTIONS OF PRIZE WINNING LOTTERY TICKETS WHICH ARE VERY MUCH APPLICABLE TO THE FACTS OF THE CASE. THE SAME ARE A S EXTRACTED HERE UNDER: 'THE MATTER HAS TO BE CONSIDERED IN THE LIGHT OF HU MAN PROBALITIES. THE CHAIRMAN OF THE SETTLEMENT COMMISSION HAS EMPHA SIZED THAT THE APPELLANT DID POSSES THE WINNING TICKET WHICH W AS SURRENDERED TO THE RACE CLUB AND IN RETURN A CROSSED CHEQUE WAS OBTAINED. IT IS, IN OUR VIEW, A NEUTRAL CIRCUMSTANCE, BECAUSE IF THE APPELLANT HAD PURCHASED THE WINNING TICKET AFTER THE EVENT SHE WO ULD BE HEAVING THE WINNING TICKET WITHHER WHICH SHE COULD SURRENDE R TO THE RACE CLUB. THE OBSERVATION BY THE CHAIRMAN OF THE SETTLE MENT COMMISSION THAT 'FRAUDULENT SALE OF WINNING TICKET S IS NOT AN USUAL PRACTICE BUT IS VERY MUCH OF ALL UN USUAL PRACTICE N IGNORES THE PREVALENT MALPRACTICE THAT WAS NOTICED BY THE DIREC T TAXES ENQUIRY COMMITTEE AND THE RECOMMENDATIONS MADE BY THE SAID COMMITTEE WHICH LED TO THE AMENDMENT OF THE ACT BY THE FINANC E ACT OF 1972, WHEREBY THE EXEMPTION FROM TAX THAT WAS AVAILABLE I N RESPECT OF WINNINGS FROM LOTTERIES, CROSSWORD PUZZLES, RACES, ETC. WAS WITHDRAWN. SIMILARLY, THE OBSERVATION BY THE CHAIRM AN THAT IF IT ALLEGED THAT THESE TICKETS WERE OBTAINED THROUGH FR AUDULENT MEANS, ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 8 IT IS UPON THE ALLEGER TO PROVE THAT IT IS SO, IGNO RES THE REALITY. THE TRANSACTION ABOUT PURCHASE OF WINNING TICKET TAKES PLACE IN SECRET AND DIRECT EVIDENCE ABOUT SUCH PURCHASE WOULD BE RA RELY AVAILABLE. AN INFERENCE ABOUT SUCH A PURCHASE HAS TO BE DRAWN ON THE BASIS OF THE CIRCUMSTANCES AVAILABLE ON THE RECORD. HAVING R EGARD TO THE CONDUCT OF THE AS DISCLOSED IN HER SWORN STATEMENT AS WELL AS OTHER MATERIAL ON THE RECORD AN INFERENCE COULD REASONABL Y BE DRAWN THAT THE WINNING TICKETS WERE PURCHASED BY THE APPELLANT AFTER THE EVENT. WE ARE THEREON, UNABLE TO AGREE WITH THE VIEW OF TH E CHAIRMAN IN HIS DISSENTING OPINION. IN OUR OPINION, THE MAJORIT Y OPINION AFTER CONSIDERING THE SURROUNDING CIRCUMSTANCES AND APPLY ING THE TEST OF HUMAN PROBABILITIES HAS RIGHTLY CONCLUDED THAT THE APPELLANT'S CLAIM ABOUT THE AMOUNT BEING HER WINNINGS FROM RACES IS N OT GENUINE. IT CANNOT BE SAID THAT THE EXPLANATION OFFERED BY THE APPELLANT IN RESPECT OF THE SAID AMOUNTS HAS BEEN REJECTED UNREA SONABLY AND THAT THE FINDING THAT THE SAID AMOUNTS ARC INCOME O F THE APPELLANT FROM OTHER SOURCES IS NOT BASED ON EVIDENCE.' SO ALSO, REFERENCE CAN BE MADE TO THE OBSERVATION O F THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. DURGA PRASAD MORE 82 IT R 540 (SC) ON PAGE 545 TO THE EFFECT THAT THE CONTENTS IN THE DOCUMENT S CANNOT BE GIVEN UNDUE IMPORTANCE AND THE REALITY AND SUBSTANCE OF THE TRA NSACTION IS TO BE CONSIDERED. 4.3.2 FURTHER JUDICIAL NOTICE IN THE AFORESAID FACT S IS REQUIRED TO BE TAKEN OF PREVAILING MALPRACTICE IN THE FILED OF MANIPULATION OF STOCK PRICES OF SUCH DUBIOUS COMPANIES BY THE OPERATOR AND MANIPULATORS WITH OR WITHOUT THE ACTIVE HELP AND ASSISTANCE OF TO SPREAD RUMOURS OR HIGHLY EXAGGERATED GROWTH/PROFIT PROSPECTS' OF SUCH COMPANIES LEADING TO SUCH PHENOMENAL PRICE RISE. REFERENCE CAN BE MADE TO THE FOLLOWING DECISIONS: (A) CWT V. ROHTAS INDUSTRIES LTD., 67 ITR 283 (SC), WHEREIN IT WAS ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 9 HELD THAT 'IN THE ABSENCE OF ANY DIRECT EVIDENCE, A JUDICIAL OR QUASI- JUDICIAL TRIBUNAL CAN BASE ITS CONCLUSIONS ON THE B ASIS OF WHAT ARC KNOWN AS NOTORIOUS FACTS BEARING IN MIND THE PRINCI PLES OF SECTION 144 OF THE EVIDENCE ACT.' (B) 'ATTAR SINGH GURMUKH SINGH V. ITO 191 ITR 667(S C) WHEREIN, WHILE INTERPRETING THE PROVISIONS OF SECTION 40A(3) , IT WAS HELD THAT 'IN INTERPRETING A TAXING STATUTE, THE COURT CANNOT BE OBLIVIOUS OF THE PROLIFERATION OF BLACK MONEY WHICH IS UNDER CIRCULA TION IN OUR COUNTRY.'' 4.3.3; AO'S FINDING THAT IT IS A CASE OF DUBIOUS TA X PLANNING, IT HAS TO BE NECESSARILY UPHELD FOR THE SIMPLE REASONS THAT THE ONLY OBJECT OF THE APPELLANT IN SO ENTERING INTO SUCH DUBIOUS TRANSACT IONS WAS EVADING/ AVOIDING INCIDENCE OF TAX BY BRINGING UNACCOUNTED C ASH NEEDED FOR INVESTMENT IN THE FORM OF INCOME ATTRACTING LOWER R ATE OF TAX. IN THE RESULT, THE AO'S ACTION IS FULLY SUPPORTED BY THE APEX COUR TS JUDGMENT IN THE CASE OF MCDOWELL V. CTO [1985] 154 ITR 148 (SC) AND THE APPELLANT'S CASE CAN NOT DERIVED ANY BENEFIT FROM THE SERIES OF JUDGMENT S LIKE ARVIND NAROTTAMDAS V. CWT (1988) 173 ITR 479 (SC)] AND UNI ON OF INDIA V PLAYWORLD ELECTRONICS P. LTD. (1990) 184 ITR 1308(S C) IN VIEW OF DETAILED DISCUSSION BELOW. SO FAR AS THE RULE IN MCDOWELL & CO. LTD V COMMERCIAL TAX OFFICER (1985) 154 ITR 148 (SC) IS CONCERNED, I T STILL HOLDS THE FIELD AND HITS TAX PLANNING'S AND DEVICES WITH THE CLEAR INTE NT OF EVASION OF TAX. IN CWT V ARVIND NAROTTAMDAS(1988) 173 ITR 479 (SC) AND UNION OF INDIA V PLAY WORLD ELECTRONICS P.LTD. (1990) 184 ITR 308(SC ), THE APEX COURT CARVED OUT AN EXCEPTION FROM THE MCDOWELL RULE HOLD ING THAT IF THE IMPUGNED TRANSACTIONS WERE BONAFIDE AND HAVING A CL EAR FINANCIAL OR ECONOMIC OBJECTIVE, THE MCDOWELL RULE SHALL NOT HIT EVEN IF TAX SAVING IS INCIDENTAL TO SUCH TRANSACTIONS. IN THE PRESENT APP ELLANT'S CASE, BONAFIDES OF TRANSACTION HAS NOT BEEN ESTABLISHED. ON THE CON TRARY, IN VIEW OF ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 10 DETAILED DISCUSSION MADE ABOVE IT CLEARLY EMERGES T HAT SUCH SALE PURCHASE TRANSACTION OF SHARES WAS DUBIOUS AND MANIPULATED. HENCE, THE ARVIND NAROTTAMDAS AND PLAY WORLD ELECTRONICS P.LTD EVEN C ASES DO NOT BAIL OUT THE APPELLANT FROM THE MC DOWELL RULE CONSEQUENCES. SO FAR AS AZADI BACHO ANDOLAN CASE IS CONCERNED IT INVOLVED INTERN ATIONAL LAW ALSO IN AS MUCH AS THE LAWS OF MAURITIUS AND DOUBLE TAXATION A VOIDANCE AGREEMENT (DTAA~ BETWEEN INDIA AND MAURITIUS WERE INVOLVED. I T IS SETTLED LAW THAT WHERE THERE IS CLASH BETWEEN THE INTERNATIONAL LAW AND THE SOVEREIGN LAW OF A STATE, THE LATTER SHALL YIELD BEFORE THE FORME R. IN THE PRESENT APPELLANT'S CASE, NO SUCH CLASH IS INVOLVED AND THE REFORE, HE CAN NOT SEEK ANY PROTECTION FROM THE AZADI BACHO ANDOLAN CASE RA TIO ALSO. 4.3.4 THUS IN VIEW OF CLEAR FACTS ON RECORD AS DISC USSED ABOVE, THE ALLEGED TRANSACTION OF SALE OF SHARES RESULTING IN STCG WAS CLEARLY A SHAM AND. BOGUS TRANSACTION AND NOT A GENUINE TRANSACTION AS CLAIMED. IN VIEW OF THE AFORESAID DISCUSSION THE AO'S ACTION IN TREATING T HE SALE CONSIDERATION OF SHARES AS INCOME FROM UNDISCLOSED SOURCES IS FULLY JUSTIFIED AND ACCORDINGLY CONFIRMED. 7. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE T RIBUNAL. 8. AT THE OUTSET LD. SENIOR COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE ISSUE RAISED IN THE INSTANT APPEAL IS SQUA RELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE CO-OR DINATE BENCH IN THE CASE OF SHRI OMPRAKASH PHATANDAS PHAJWANI V/S A CIT, I.T.A.NO.968/IND/2016 ORDER DATED 19.1.2018 WHEREIN SIMILAR FACTS RELATING TO SALE OF IFCI LTD SHARES AND ABNORMAL DE LAY IN MAKING THE PAYMENT OF PURCHASE TO THE SHARE BROKER WERE TH ERE FOR ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 11 ADJUDICATION AND THE CO-ORDINATE BENCH ALLOWED THE ASSESSEES APPEAL HOLDING THAT FOR THE ALLEGED SHORT TERM CAPI TAL GAIN BOTH THE LOWER AUTHORITIES ERRED IN TREATING THE SHORT TERM CAPITAL GAIN AS INCOME FROM OTHER SOURCES. LD. SENIOR COUNSEL FOR THE ASSESSEE HAS ALSO SUBMITTED THAT NO PROPER OPPORTUNITY WAS G IVEN TO THE ASSESSEE TO CROSS EXAMINE SHRI VISHAL J SHAH WHO IS THE SON OF THE SHARE BROKER AND THE STATEMENT OF SHRI VIJAY V SHAH WAS RECORDED BY THE DDIT, MUMBAI AND NOT BY THE ASSESSING OFFICE R HIMSELF. THUS THE TRUTHFULNESS OF THE STATEMENT REMAIN UNTES TED BY THE LD.A.O. HE FURTHER REQUESTED THAT AN ADEQUATE OPPO RTUNITY OUGHT TO HAVE BEEN GIVEN TO THE ASSESSEE TO CROSS EXAMINE THE SHARE BROKER THROUGH WHOM THE EQUITY SHARES OF IFCI LTD WERE PURCHASED. 9. PER CONTRA THE LD. DEPARTMENTAL REPRESENTATIVE V EHEMENTLY ARGUED SUPPORTING THE ORDERS OF BOTH THE LOWER AUTH ORITIES. 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS PLACED BEFORE US. IN THE INSTANT APPEAL RELATING T O SMT. ANNAPURNA MAHESHWARI FOR ASSESSMENT YEAR 2008-09, THE SOLE GR IEVANCE OF THE ASSESSEE IS AGAINST THE FINDING OF LD.CIT(A) CONFIR MING THE ACTION OF ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 12 THE LD.A.O TREATING THE SHORT TERM CAPITAL GAIN FRO M PURCHASE/SALE OF EQUITY SHARES OF IFCI LTD AT RS.46 ,91,512/- AS INCOME FROM OTHER SOURCES AND ALSO HOLDING THAT THE SE TRANSACTIONS ARE SHAM AND BOGUS. FROM PERUSAL OF DETAILS, WE FI ND THAT THERE WERE THREE TRANSACTIONS FOR PURCHASE AND SALE OF EQ UITY SHARES OF IFCI LTD. PURCHASES WERE MADE ON 19.7.2006, 26.09, 2006 AND 27.09.2006 OF 35,000/-, 15,000/- AND 40,000/- EQUIT Y SHARES OF IFCI LTD FOR A SUM OF RS.2,86,412/-, RS.1,43,250/- AND RS.4,23,591/- RESPECTIVELY. THESE PURCHASES WERE M ADE THROUGH SETTLEMENT NO.0607079, 0607127 AND 060712B ISSUED B Y THE STOCK BROKER M/S. VIJAY BHAGVANDAS & COMPANY WHO IS THE MEMBER OF STOCK EXCHANGE, BOMBAY AND REGISTERED WIT H SEBI REG. NO.INB 011194819. ALL THE ABOVE REFERRED EQUITY SHA RES OF IFCI LTD WERE DULY TRANSFERRED INTO THE D-MAT ACCOUNT HELD B Y THE ASSESSEE AND THE SHARES WERE SOLD ON 15.5.2007, 15.7.2007 AN D 14.8.2007 AT THE SALE CONSIDERATION OF RS.16,43,711/-, 7,04,4 48/- AND RS.26,34,606/-RESPECTIVELY. REVENUE HAS NOT DISPUT ED THIS FACT THAT THE ALLEGED EQUITY SHARES OF IFCI LTD WERE TRA NSFERRED IN THE D- MAT ACCOUNT OF THE ASSESSEE AFTER THE PURCHASE AND TRANSFERRED OUT FROM THE DEMAT ACCOUNT AT THE TIME OF SALE. REVENU E HAS ALSO NOT ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 13 DISPUTED THAT THE PAYMENTS HAVE BEEN MADE THROUGH A CCOUNT PAYEE CHEQUE AND SIMILARLY GENUINENESS OF SALE CONSIDERA TION HAS ALSO NOT BEEN DOUBTED WHICH WERE MADE THROUGH A REGISTER ED BROKER OF RECOGNIZED STOCK EXCHANGE. 11. THE BONE OF CONTENTION WAS THAT THERE WAS A SIG NIFICANT GAP BETWEEN THE DATE OF PURCHASE AND THE DATE OF PAYMEN T FOR THE PURCHASES WHICH IS AROUND 8 TO 9 MONTHS AND THE SA ME HAS BEEN THE MAIN CAUSE FOR TREATING THE ALLEGED TRANSACTION AS BOGUS. THE LD.A.O ALSO TOOK SUPPORT OF THE STATEMENT GIVEN BY MR. VISHAL VJAY J SHAH WHO IS THE SON OF THE PROPRIETOR OF THE STO CK BROKING FIRM M/S. VIJAY BHAGVANDAS & COMPANY WHO DENIED THE ALLE GED TRANSACTION OF PURCHASES WERE DENIED. HOWEVER NOTH ING ODD WAS NOTICED ABOUT THE PAYMENT FOR PURCHASES MADE THROUG H ACCOUNT PAYEE CHEQUE. THESE TWO REASONS LEAD THE WAY OF TH E ALLEGED TREATMENT OF SHORT TERM CAPITAL GAIN FROM SALE OF S HARES DECLARED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES ALONG WITH TREATING THEM AS SHAM AND BOGUS TRANSACTIONS. 12. WE FIND THAT VERY SAME SET OF FACTS CAME UP BEF ORE THE CO- ORDINATE BENCH IN THE CASE OF SHRI OMPRAKASH PHATAN DAS PHAJWANI ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 14 V/S ACIT ( SUPRA ) WHEREIN THE SHARES OF IFCI LTD WERE PURCHASED AND THERE WAS A SIGNIFICANT GAP IN BETWEEN THE DATE OF PURCHASE AS PER THE CONTRACT NOTE AND DATE OF PAYMENT FOR THE PURCHASES. THE TRIBUNAL DECIDED THE ISSUE IN FAVOUR OF THE ASSESSE E OBSERVING AS FOLLOWS; 7. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORDS CAREFULLY. 8. IN GROUND NO.1 TO 6 RAISED BY THE ASSESSEE, THE SOLE GRIEVANCE IS AGAINST THE ORDER OF LD.CIT(A) PARTLY CONFIRMING TH E ADDITION MADE BY LD. A.O BY TREATING THE SHORT TERM CAPITAL GAIN OF RS.6 ,62,870/AS INCOME FROM UNDISCLOSED SOURCES WHICH WAS ADDED BY THE LD. A.O APPLYING PROVISIONS OF SECTION 68 OF THE ACT. WE OBSERVE THA T THE ISSUE REVOLVES ROUND THE TRANSACTION OF SHORT TERM CAPITAL GAIN FR OM SALE OF SHARES. THE LD.A.O HAS DOUBTED THE GENUINENESS OF PURCHASE OF I FCI SHARES WHICH WERE BOUGHT THROUGH THE BROKER M/S. CHANDRAVAN BHAI CHAND MUCHCHALA, MUMBAI BY CONTRACT NOTE NO.7024 DATED 17 .10.2006. AT THAT POINT OF TIME PRICE PER EQUITY SHARE OF IFCI LTD WA S RS.9.95. HOWEVER THE PAYMENT FOR THIS PURCHASE OF RS.1,19,530/- WAS MADE AFTER NINE MONTHS I.E. 1.7.2007. THE 12000 EQUITY SHARES BOUGHT BY TH E ASSESSEE @RS.9.95 PER SHARE WERE TRANSFERRED TO DMAT ACCOUNT ON 13.8. 2007 AND THEN THESE WERE SOLD ON 17.8.2007 AND THE PRICE PER EQUITY SHA RE ON THE DATE OF SALE WAS AROUND RS.63. 9. THE LD.A.O DOUBTED THE IMPUGNED PURCHASE BECAUSE THE PAYMENT WAS MADE AFTER NINE MONTHS EVEN WHEN THERE WAS NO REGUL AR TRANSACTION BETWEEN THE ASSESSEE AND BROKER AND ALSO THERE WAS EXTRA ORDINARY INCREASE IN THE PRICES OF THE EQUITY SHARES. AS MEN TIONED BY THE LD.A.O IN THE IMPUGNED ASSESSMENT ORDER THAT NATIONAL STOC K EXCHANGE DENIED ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 15 OF HAVING ANY TRANSACTION OF PURCHASE OF IFCI TD. S HARES BY THE ASSESSEE DUE TO THIS REASON THE PURCHASES WERE DOUBTED AND T HE TRANSACTION WAS TREATED AS SPAM AND THE ALLEGED SALE RECEIPT FROM S ALE OF SHARES WAS TREATED AS UNEXPLAINED INCOME. WHEN THE MATTER CAME UP BEFORE THE LD.CIT(A), HE IGNORED THE EXISTENCE OF ANY PURCHASE MADE ON 17.10.2006 AND CALCULATED THE SHORT TERM CAPITAL GAIN BY TAKIN G COST OF EQUITY SHARES ON THE DATE OF DEMATIZING OF 12000 EQUITY SHARES. T HIS RESULTED INTO THE SHORT TERM CAPITAL GAIN LOSS TOTALING RS.18,504/-. THE LD.CIT(A) ACCORDINGLY TREATED RS.6,62,870/- AS INCOME FROM UN KNOWN SOURCES AFTER GIVING BENEFIT OF PURCHASE COST OF RS.1,19,53 0/- AGAINST THE SALE CONSIDERATION. 10. BEFORE MOVING FURTHER WE WILL LIKE TO REPRODUCE THE FINDINGS OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S H IMANI M VAKIL [2014] 41 TAXMANN.COM 425 (GUJARAT HC) WHEREIN SIMILAR ISS UE AND ALMOST IDENTICAL FACTS CAME UP FOR ADJUDICATION AND HON'BL E HIGH COURT DISMISSED THE REVENUE'S APPEAL OBSERVING AS FOLLOWS ; WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HON'BLE ITAT IS RIGHT IN DELETING THE ADDITION OF RS.36,72, 631/ - MADE U/S 68 BY THE ASSESSING OFFICER BY TREATING THE SHORT TERM CA PITAL GAIN AS UNEXPLAINED CASH CREDIT?' 2. THE ASSESSMENT YEAR IS 2006-07 AND THE RELEVANT ACCOUNTING PERIOD IS 1.04.2005 TO 31.3.2006. THE RESPONDENT - ASSESSEE, AN INDIVIDUAL, FILED HER RETURN OF INCOME SHOWING TOTAL INCOME OF RS.8,7 2,299/- INCLUDING SHORT TERM CAPITAL GAIN OF RS.2,78,413/ - AND LONG TERM C APITAL GAIN OF RS.3,41,683/-. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE CLAIMED LONG TERM CAPITAL GAIN OF RS.34,65,171/ - ON A SCRI P NAMED SHRI NIDHI TRADING LIMITED. ON SCRUTINIZING THE COMPLETE TRANS ACTION THE TOTAL SALE VALUE CAME TO RS.36,72,631/- AND TOTAL PURCHASE VAL UE CAME TO RS.2,07,460/-. THE ASSESSEE ACCORDINGLY SHOWED CAPI TAL GAIN OF RS.34,65,171/-. THE ASSESSING OFFICER AFTER SEEKING DETAILS FROM THE ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 16 PARTIES TREATED THE SUM OF RS.36,72,631/- CREDITED IN THE BOOKS OF ACCOUNTS UNEXPLAINED CASH CREDIT UNDER SECTION 68 O F THE ACT AND BROUGHT IT TO TAX. THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE COMMISSIONER (APPEALS) WHO ALLOWED THE SAID GROUND OF APPEAL AND DIRECTED THE ASSESSING OFFICER TO ACCEPT THE CLAIM OF THE ASSESSEE OF RS.34,65,171/ - AS CAPITAL GAINS. THE REVENUE CARRI ED THE MATTER IN APPEAL BEFORE THE TRIBUNAL, BUT DID NOT SUCCEED. 3. MR. MANAV MEHTA, LEARNED COUNSEL FOR THE APPELLA NT HAS ASSAILED THE IMPUGNED ORDER BY PLACING RELIANCE UPON THE REASONI NG ADOPTED BY THE ASSESSING OFFICER. 4. AS CAN BE SEEN FROM THE IMPUGNED ORDER, THE TRIB UNAL, AFTER APPRECIATING THE EVIDENCE ON RECORD, HAS FOUND THAT BEFORE THE ASSESSING OFFICER THE ASSESSEE HAD EXPLAINED THAT THE PURCHAS E TRANSACTIONS WERE MADE ON THE ONLINE TRADING SYSTEM' AND THESE TRANS ACTIONS ARE GENUINE. EARLIER, THIS IS PRIOR TO 1.4.2005, IT WAS NOT COMP ULSORY FOR THE CLIENT TO HAVE HIS OWN TRANSACTION RECORD UNDER SEBI GUIDELIN ES. THEREFORE, THE PURCHASES EARLIER WERE MADE USING THE BROKER'S CODE , AND IT WAS FOR THIS REASON THAT THE BROKER HAD USED THE SELF CODE'. SI NCE THE SHARES WERE SOLD AFTER 1.4.2005, THE TRANSACTIONS WERE NOT UNDER THE BROKER'S CODE. AS REGARDS SERVICE TAX AND STAMP CHARGES THE CONTRACT NOTE OF THE BROKER CLEARLY MENTIONED THAT THE BROKERAGE WAS INCLUSIVE OF SERVICE TAX ETC. IN THE CASE OF THE SELLING BROKER THE SERVICE TAX SECU RITIES TRANSACTION TAX AND EDUCATION CESS WERE SEPARATELY MENTIONED. AS RE GARDS THE POINT RAISED BY THE ASSESSING OFFICER THAT THERE WAS ABSE NCE OF BROKER-CLIENT AGREEMENT, THE TRIBUNAL ACCEPTED THE SUBMISSION OF THE ASSESSEE THAT THE GENUINENESS OF THE TRANSACTIONS WAS ALREADY PROVED BY THE CONTRACT NOTES FOR SALE AND PURCHASE, THE BANK STATEMENT OF THE BR OKER, THE DEMAT ACCOUNT SHOWING TRANSFER IN AND OUT OF SHARES, AS A LSO ABSTRACT OF TRANSACTIONS FURNISHED BY THE CSE. THE TRIBUNAL, AF TER APPRECIATING THE EVIDENCE ON RECORD, CONCURRED WITH THE FINDINGS REC ORDED BY THE COMMISSIONER (APPEALS) THAT THE ASSESSEE HAD FURNIS HED COMPLETE DETAILS WHICH WERE NOT FOUND FALSE OR BOGUS BY THE ASSESSIN G OFFICER AND THAT IT ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 17 WAS ONLY ON SUSPICION THAT THE ASSESSING OFFICER HA D TREATED THE CAPITAL GAIN DECLARED BY THE ASSESSEE AS UNEXPLAINED CASH C REDIT UNDER SECTION 68 OF THE ACT. IN THE LIGHT OF THE AFORESAID FINDIN GS OF FACT RECORDED BY IT, THE TRIBUNAL DISMISSED THE APPEAL OF THE REVENUE. 5. IN THE LIGHT OF THE ABOVE FINDINGS OF FACT RECOR DED BY THE TRIBUNAL, IT IS NOT POSSIBLE TO STATE THAT THE VIEW ADOPTED BY THE TRIBUNAL IS, IN ANY MANNER, UNREASONABLE OR PERVERSE. BESIDES, THE LEAR NED COUNSEL FOR THE APPELLANT IS NOT IN A POSITION TO SHOW THAT THE TRI BUNAL HAS PLACED RELIANCE UPON ANY IRRELEVANT MATERIAL OR THAT ANY RELEVANT M ATERIAL HAS BEEN IGNORED, NOR IS HE ABLE TO POINT OUT ANY MATERIAL T O THE CONTRARY SO AS TO DISLODGE THE CONCURRENT FINDINGS OF FACT RECORDED B Y THE TRIBUNAL. UNDER THE CIRCUMSTANCES, THE IMPUGNED ORDER BEING BASED U PON CONCURRENT FINDINGS OF FACT RECORDED BY THE TRIBUNAL UPON APPR ECIATION OF THE EVIDENCE OF RECORD, DOES NOT GIVE RISE TO ANY QUESTION OF LA W, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW SO AS TO WARRANT INTERF ERENCE. THE APPEAL IS, ACCORDINGLY, DISMISSED.' 11. NOW IN ORDER TO APPRECIATE AND EXAMINE THE FAC TS IN THE LIGHT OF ABOVE JUDGMENT, WE FIND THAT THE ASSESSEE PLACED FO LLOWING DOCUMENTS BEFORE THE LOWER AUTHORITIES; 1.CONTRACT NOTE CUM BILL OF BROKER FROM WHOM SHARES WERE PURCHASED; 2. CONFIRMATION OF ACCOUNTS FROM THE SAME BROKER 3. COPY OF LEDGER ACCOUNTS OF BROKER 4. COPY OF BANK ACCOUNT OF THE ASSESSEE 5. COPY OF D-MAT ACCOUNT OF THE ASSESSEE 6. COPY OF STATEMENT OF AFFAIRS OF THE ASSESSEE 7. COPY OF CONTRACT NOTE CUM BILL FOR SALE OF SHARE S 12. NOW ABOVE REFERRED DETAILS EXCEPT FOR THE GENUI NENESS OF PURCHASE, ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 18 THE LD.A.O HAS NOT CHALLENGED THE GENUINENESS OF OT HER DETAILS MOST IMPORTANTLY THE SALE OF SHARES WHICH HAVE BEEN EFFE CTED BY THE ASSESSEE THROUGH BOMBAY STOCK EXCHANGE PORTAL AND SOLD THROU GH ANGEL CAPITAL & DEBT MARKET LTD. THE RELEVANT DOCUMENTS IN THE PA PER BOOK FROM PAGE 23 TO 30 PROVE BEYOND DOUBT THE GENUINENESS OF SALE OF EQUITY SHARES. IT IS ALSO NOT DISPUTED THAT THE SHARE OF IFCI LTD WER E DEMATIZED AFTER THE PURCHASE AND THEY HAVE BEEN DEBITED FROM THIS ACCOU NT AT THE TIME OF SALE. AS FAR AS PURCHASE IS CONCERNED THE SHARES HA VE BEEN PURCHASED THROUGH A REGISTERED BROKER WHO IS A MEMBER OF STOC K EXCHANGE, BOMBAY HAVING SEBI REGISTRATION NO.INB010005219. FO R THE ONLY REASON THAT THE PAYMENT OF PURCHASE HAS BEEN MADE AFTER A LAPSE OF 9 MONTHS CANNOT RENDER THE PURCHASE AS NON GENUINE UNLESS AN D OTHERWISE ANY MATERIAL IS BROUGHT ON RECORD WHICH COULD NEGATE TH IS FACT. 13. FURTHER WE FIND THAT THE ADDITION HAS BEEN MADE FOR THE UNEXPLAINED CREDIT OF RS.7,64,346/- BUT NOWHERE RIGHT FROM THE ASSESSMENT PROCEEDINGS AND TILL THE PROCEEDINGS BEFORE THE APP ELLATE AUTHORITY, REVENUE AUTHORITIES HAVE EVER DOUBTED THE SOURCE OF AMOUNT OF SALE CONSIDERATION OF RS.7,64,346/- WHICH THE ASSESSEE R ECEIVED THROUGH BANKING CHANNEL FROM SALE OF SHARES HELD IN DMAT AC COUNT THROUGH THE RECOGNIZED STOCK EXCHANGE WHICH IS VERIFIABLE FROM THE CONTRACT NOTE. 14. WE THEREFORE IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE ARE OF THE CONSIDERED OPINION THAT BOTH THE LOWER AUTHORIT IES ERRED IN TREATING THE ALLEGED TRANSACTION OF SALE OF EQUITY SHARES AS A SHAM TRANSACTION. WE ACCORDINGLY SET ASIDE THE FINDINGS OF BOTH THE L OWER AUTHORITIES AND ALLOW THE APPEAL OF THE ASSESSEE AND FURTHER HOLD T HAT THE ASSESSEE HAS RIGHTLY SHOWN THE SHORT TERM CAPITAL AMOUNTING TO R S.6,44,816/- FROM SALE OF EQUITY SHARES OF IFCI LTD. IN THE RESULT GR OUND NO. 1 TO 6 OF THE ASSESSEE'S APPEAL ARE ALLOWED. 15. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED. ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 19 13. FROM THE PERUSAL OF THE ABOVE FINDING OF THE CO -ORDINATE BENCH AS WELL AS IN THE GIVEN FACTS AND CIRCUMSTANC ES OF THE CASE, WE FIND THAT THE FACTS AND ISSUES ARE VERBATIM SIMI LAR SO MUCH SO THAT THE GENUINENESS OF THE SALE TRANSACTIONS HAS N OT BEEN DOUBTED BY THE REVENUE AUTHORITIES. EQUITY SHARES OF THE I FCI LTD HAVE BEEN PURCHASED BY MAKING PAYMENT THROUGH DISCLOSED SOURC ES IN THE FORM OF ACCOUNT PAYEE CHEQUE. EQUITY SHARES HAVE B EEN DULY TRANSFERRED IN AND TRANSFERRED OUT OF THE DEMAT ACC OUNT OF THE ASSESSEE AT THE TIME OF PURCHASE AND SALE RESPECTIV ELY. THE ALLEGED ADDITION MADE U/S 68 OF THE ACT FOR UNEXPLAINED CAS H CREDIT DO NOT APPLY IN THE GIVEN FACTS WHEN THE SALE CONSIDERATIO N HAS ITSELF BEEN FOUND TO BE GENUINE. THEREFORE FOR THE ONLY REASON THAT PAYMENTS HAVE BEEN MADE AFTER SIGNIFICANT TIME WHICH IS ALSO IN THE RANGE OF 8 TO 9 MONTHS AND THE DENIAL OF THE SHARE BROKER OF T HE ALLEGED TRANSACTION EVEN WHEN THE CONTRACT NOTE HAS BEEN IS SUED SHOWING COMPLETE DETAILS OF THE SHARES PURCHASED, SETTLEMEN T NUMBER, ORDER NUMBER, SECURITY NAME, PURCHASE RATE, SERVICE TAX C HARGED AND ALL THE NECESSARY INGREDIENTS ARE MENTIONED IN THE CONT RACT NOTE FOR THE PURCHASE OF EQUITY SHARES OF WELL KNOWN COMPANY I.E . IFCI LTD, THEN IN SUCH SITUATION THE PURCHASE CANNOT BE DOUBT ED. THEREFORE IF ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 20 THE PURCHASE AND SALE ARE NOT DOUBTED AS THE PAYMEN TS MADE FOR PURCHASE AND SALE CONSIDERATION RECEIVED ARE ALSO G ENUINE, DEMAT ACCOUNT HAS BEEN USED FOR THE ALLEGED TRANSACTIONS OF PURCHASE AND SALE, THEN MERE DELAY IN PAYMENT ITSELF CANNOT PROV E THAT THE TRANSACTIONS ARE SHAM AND BOGUS. WE THEREFORE RESP ECTFULLY FOLLOWING THE DECISION OF CO-ORDINATE BENCH AND IN VIEW OF OUR ABOVE FINDING SET ASIDE THE ORDER OF THE LOWER AUTH ORITIES AND ALLOW THE GROUND RAISED BY THE ASSESSEE AND DIRECT THE LD . ASSESSING OFFICER TO TREAT THE ALLEGED PROFIT FROM SALE AND P URCHASE OF EQUITY SHARES OF IFCI LTD AT RS.41,29,512/- AS SHORT TER M CAPITAL GAIN AND TAX ACCORDINGLY. IN THE RESULT APPEAL OF THE A SSESSEE IS ALLOWED. 14. NOW WE TAKE I.T.A.NO.252/IND/2016 IN THE CASE O F SMT. ANNAPURNA MAHESHWARI FOR ASSESSMENT YEAR 2010-11 WH EREIN SIMILAR GROUNDS HAVE BEEN RAISED AS THOSE RAISED FO R ASSESSMENT YEAR 2008-09 THEREBY CHALLENGING THE FINDING OF BOT H THE LOWER AUTHORITIES OF TREATING THE SHORT TERM CAPITAL GAIN OF RS.30,80,790/- AS INCOME FROM OTHER SOURCES AT RS.28,31,383/- AND BUSINESS PROFIT OF RS.2,49,406/-. ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 21 15. WE FIND THAT IN THE ASSESSMENT YEAR 2010-11 ASS ESSEE PURCHASED EQUITY SHARES OF RELIANCE INDIA INFRA , H DIL, UNITECH AND RELIANCE COMMUNICATIONS. THE ASSESSEE DECLARED SHO RT TERM CAPITAL GAIN OF RS.28,31,383/- FOR PURCHASE AND SAL E OF EQUITY SHARES OF RELIANCE INDIA INFRA. THERE WAS A GAP O F AROUND 6 MONTHS FOR THE PAYMENT FOR PURCHASE OF EQUITY SHARE S. THE ALLEGED TRANSACTIONS WERE NOT ACCEPTED BY THE SHARE BROKER AND ALL OTHER RELEVANT DETAILS I.E. CONTRACT NOTE, DEMAT ACCOUNT, MODE OF PAYMENT BY ACCOUNT PAYEE CHEQUE, GENUINENESS OF SALES INCLU DING THE SOURCE AND SALE CONSIDERATION HAVE NOT BEEN DOUBTED. THE GIVEN FACTS ARE SIMILAR TO THE CASE DEALT BY US IN THE CASE OF SAM E ASSESSEE FOR ASSESSMENT YEAR 2008-09. WE THEREFORE APPLY THE S AME REASONING AND ALSO FOLLOWING THE DECISION OF CO-ORDINATE BENC H IN THE CASE OF SHRI OMPRAKASH PHATANDAS PHAJWANI V/S ACIT, ( SUPRA ) ARE OF THE CONSIDERED OPINION THAT BOTH THE LOWER AUTHORITIES ERRED IN TREATING RS.28,31,383/- AS INCOME FROM OTHER SOURCES WHICH W ERE RIGHTLY SHOWN BY THE ASSESSEE AS SHORT TERM CAPITAL GAIN. WE, THEREFORE ALLOW GROUND NO.1 RAISED BY THE ASSESSEE AND DIREC T THE ASSESSSING OFFICER TO TAX THE ALLEGED INCOME OF RS. 28,31,383/- FROM SALE OF SHARES AS SHORT TERM CAPITAL GAIN AND NOT A S INCOME FROM ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 22 OTHER SOURCES. IN THE RESULT GROUND NO.1 RAISED BY THE ASSESSEE IS ALLOWED. 16. AS REGARDS GROUND NO.2 WHICH DEALS WITH THE PRO FIT OF RS.2,49,045/- EARNED BY THE ASSESSEE WHEREIN THE DE LIVERY OF SHARES HAVE NOT BEEN TAKEN THROUGH DEMAT ACCOUNT BE CAUSE THE SHARES WERE SOLD IN SHORT SPAN OF TIME I.E. WITHIN 7 TO 8 DAYS OF THE PURCHASE AND FOR THIS REASON THE GAIN OF RS.2,49,04 5/- HAS BEEN TREATED AS BUSINESS PROFIT. WE FIND THAT THE ASSES SEE IS NOT A REGULAR TRADER OF SHARES AS IT EARNED INCOME FROM S ALARY AND HOUSE PROPERTY. THIS IS NOT THE CASE OF AN INTRA DAY TRA DING NOR OF THE FORWARD MARKET TRADING FOR DERIVATIVES. IT IS SIMP LY A CASE THAT SHARE HAVE BEEN PURCHASED AND THEY WERE HELD IN THE DEMAT ACCOUNT OF THE BROKER AND AS THE ASSESSEE HAS SOLD THEM IN A VERY SHORT PERIOD THEY WERE NOT TRANSFERRED TO HER DEMAT ACCOUNT. IT IS NOT THE CASE OF REVENUE THAT THE BROKER I.E. HDIL F INANCIAL LTD HAS NOT RECEIVED THE DELIVERY OF SHARES PURCHASED AND H AS NOT DELIVERED THE SHARES AT THE TIME OF SALE. IN SUCH SITUATION TREATING OF INCOME OF RS.2,49,045/- AS BUSINESS INCOME WILL NOT BE JUS TIFIED. WE THEREFORE SET ASIDE THE FINDING OF LOWER AUTHORITIE S AND DIRECT THE ASSESSING OFFICER TO TAX THE INCOME OF RS.2,49,045/ - TREATING IT AS ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 23 SHORT TERM CAPITAL GAIN FROM SALE OF SHARES. GROUN D NO.2 OF THE ASSESSEE IS ALLOWED. 17. GROUND NO.3 IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 18. IN THE RESULT THE GROUNDS RAISED BY THE ASSESSE E FOR ASSESSMENT YEAR 2010-11 ARE ALLOWED. 19. NOW WE TAKE I.T.A.NO.53/IND/2014 IN THE CASE OF SHRI PRADEEP MAHESHWARI FOR ASSESSMENT YEAR 2008-09 WHEREIN THE ASSESSEE HAS RAISED THREE GROUNDS. ISSUES RAISED IN GROUND NO.1 & 2 RELATES TO TREATMENT OF SHORT TERM CAPITAL GAIN AND LONG TERM CAPITAL GAIN AT RS.23,80,747/- AND RS.17,23,052/- AS UNEXPLAINED CA SH CREDITS U/S 68 OF THE ACT. 20. AS FAR AS GROUND NO.1 RELATING TO SHORT TERM CA PITAL GAIN OF RS.28,31,383/- IS CONCERNED FROM PERUSAL OF THE REC ORDS WE FIND THAT THE FACTS AND CIRCUMSTANCES WHICH WE HAVE DEAL T IN THE CASE OF SMT. ANNAPURA MAHESHWARI IN I.T.A.NO.315/IND/2012 AND I.T.A.NO.252/IND/2016 ARE VERBATIM SIMILAR AS THE S HORT TERM CAPITAL GAIN HAS ARISED FROM PURCHASE AND SALE OF E QUITY SHARES OF ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 24 IFCI LTD AND GENUINENESS OF THE PURCHASE TRANSACT IONS HAS BEEN DOUBTED FOR SIGNIFICANT DELAY IN MAKING THE PAYMENT FOR PURCHASE AND ALL OTHER CIRCUMSTANCES REMAINS THE SAME I.E. THE GENUINENESS OF PAYMENT AND SALE CONSIDERATION AND TRANSACTIONS BEING ROUTED THROUGH THE DEMAT ACCOUNT HELD BY THE ASSESSEE. WE THEREFORE APPLY THE SAME REASONING AS WE HAVE APPLIED IN THE ABOVE REFERRED TWO APPEALS IN THE CASE OF SMT. ANNAPURNA MAHESHWAR I AND ALLOW GROUND NO.1 RAISED BY THE ASSESSEE, DIRECTING THE A SSESSING OFFICER TO TAX THE ALLEGED INCOME OF RS.23,87,747/- BY TREA TING IT AS SHORT TERM CAPITAL GAIN FROM SALE OF LISTED EQUITY SHARES AS PER THE PROVISIONS OF SECTION 111A OF THE I.T ACT. 21. AS FAR AS GROUND NO.2 IS CONCERNED THE FACTS A RE LITTLE DIFFERENT BECAUSE THE ALLEGED CAPITAL GAIN OF RS.17,23,052/- HAS BEEN CLAIMED AS EXEMPT INCOME BY VIRTUE OF PROVISION OF SECTION 10(38) OF THE I.T. ACT. HOWEVER THE ASSESSING OFFICER APPL YING THE SAME FINDING WHICH HE HAS TAKEN FOR TREATING THE SHORT T ERM CAPITAL GAIN AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT HAS TR EATED THE TRANSACTION AS SHAM AND BOGUS. LD.A.O HAS DENIED T HE BENEFIT OF EXEMPTION U/S 10(38) OF THE ACT AND ADDED THE INCOM E AS INCOME ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 25 FROM OTHER SOURCES U/S 68 OF THE ACT. LD. CIT(A) H AS CONFIRMED THE VIEW TAKEN BY THE LD.A.O. AS FAR AS THE GENUINENES S OF THE TRANSACTION IS CONCERNED THE FACTS REMAINS THE SAME ABOUT THE PURCHASE AND SALE OF THE EQUITY SHARES OF IFCI LTD THROUGH THE STOCK BROKERS DULY EVIDENCED BY CONTRACT NOTES AND PAYMENT THROUGH ACCOUNT PAYEE CHEQUE. WE INTEND TO APPLY T HE SAME DECISION AS TAKEN BY US WHILE ADJUDICATING SAME ISS UE AND SIMILAR FACTS IN THE PRECEDING PARAGRAPHS AND ACCORDINGLY F IND NO MERIT IN THE FINDING OF BOTH THE LOWER AUTHORITIES OF TREATI NG THE ALLEGED TRANSACTIONS GIVING RISE TO LONG TERM CAPITAL GAIN AS SHAM AND BOGUS AND THEREFORE THE ADDITION SHOULD NOT HAVE BE EN MADE FOR UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 22. HOWEVER WHETHER THE ALLEGED INCOME IS TO BE TR EATED AS SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN STILL N EEDS TO BE LOOKED INTO. FOR THE PURPOSE OF CLAIMING THE EXEMPTION FO R LONG TERM CAPITAL GAIN THE LISTED EQUITY SHARES SHOULD BE HEL D BY THE ASSESSEE FOR MORE THAN 12 MONTHS. FROM PERUSAL OF FACTS WE OBSERVE THAT THE ALLEGED INCOME OF RS.17,23,052/- WAS EARNED FRO M TWO TRANSACTIONS, FIRSTLY FROM SELLING 10,000 EQUITY SH ARES OF IFCI LTD ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 26 GIVING A GAIN OF RS.,4,05,418/- AND ANOTHER TRANSAC TION OF SELLING 25,000 EQUITY SHARES OF IFCI LTD GIVING GAIN OF RS. 13,17,634/-. IN BOTH THESE TRANSACTIONS THE PURCHASE DATE I.E. DATE OF CONTRACT NOTE IS 16.06.06 AND 25.7.06. THE PAYMENT FOR THESE PUR CHASE WAS MADE ON 04.05.2007 AND MOST IMPORTANTLY AS DISCENAB LE FROM PAPER BOOK PAGE-21 THE EQUITY SHARES PURCHASED CAM E IN TO THE DEMAT ACCOUNT OF THE ASSESSEE AS ON 25.6.2007, WHIC H MEANS THAT THE TRANSFER OF EQUITY SHARES INTO THE DEMAT ACCOUN T OF THE ASSESSEE IS AFTER MAKING THE PAYMENT ON 4.5.2007. IT IS TRU E THAT THE PURCHASE DATE ARE AS PER CONTRACT NOTE IS 16.6.06 A ND 25.6.06 BUT THE PAYMENT FOR THE PURCHASE HAS OCCURRED ON 4.5.20 07 AND THE TRANSFER OF THE SHARES INTO THE DEMAT ACCOUNT OF TH E ASSESSEE HAS BEEN DONE AFTER MAKING THE PAYMENT AND THESE EQUITY SHARES OF IFCI LTD WERE SOLD ON 26.6.07 AND 27.8.07. THIS SH OWS THAT THE SHARES OF IFCI LTD WERE HELD BY THE ASSESSEE FOR A PERIOD OF LESS THAN 12 MONTHS. THERE IS NO EVIDENCE ON RECORD PLAC ED BY THE ASSESSEE WHICH CAN PROVE THAT THE STOCK BROKER WHO SOLD THE EQUITY SHARES TO THE ASSESSEE, HELD THEM ON BEHALF OF THE ASSESSEE IN ITS DEMAT ACCOUNT ON THE DATE OF THE CONTRACT NOTE. TH IS FACT STRENGTHENS OUR VIEW THAT THE SHARES WERE HELD IN T HE DEMAT ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 27 ACCOUNT OF THE ASSESSEE FOR A PERIOD OF LESS THAN 1 2 MONTHS. 23. SITUATION MAY HAVE BEEN DIFFERENT IF ON THE DAT E OF THE CONTRACT NOTE OR A DAY OR TWO THEREAFTER THE EQUITY SHARES HAD BEEN TRANSFERRED TO THE DEMAT ACCOUNT OF THE ASSESSEE OR IT WOULD HAVE BEEN PROVED THAT THE STOCK BROKER HAS HELD THE SHAR ES ON BEHALF OF THE ASSESSEE IRRESPECTIVE OF THE FACT WHETHER THE P AYMENT FOR THE PURCHASE HAVE BEEN MADE OR NOR NOT, THEN IT MAY HAV E BEEN INFERRED THAT THE PERIOD OF SUCH HOLDING OF EQUITY SHARES HAD BEEN MORE THAN 12 MONTHS THEN THE CLAIM OF THE ASSESSEE MAY HAVE BEEN ENTERTAINED UNDER THE PROVISIONS OF SECTION 10(38) OF THE ACT. BUT THE FACTS IN THE INSTANT CASE CLEARLY SHOWS THAT EX CEPT THE DATE OF CONTRACT NOTE I.E. 16.6.06 AND 25.6.06 THERE IS NO FURTHER ACTION FROM BOTH THE SIDES I.E. THE ASSESSEE AND THE STOCK BROKER FOR COMPLETING THE TRANSACTION OF TRANSFER OF EQUITY SH ARES OF IFCI LTD. IT IS ONLY AFTER THE PAYMENT ON 4.5.07 THAT THE TRA NSFER OF EQUITY SHARES TOOK PLACE INTO THE DEMAT ACCOUNT OF THE ASS ESSEE ON 25.6.07 AND 24.8.07. EXEMPTION U/S 10(38) OF THE A CT IS ALLOWABLE IF THE EQUITY SHARES ARE HELD BY THE ASSESSEE FOR MORE THAN 12 MONTHS AND IF THEY ARE HELD FOR LESS THAN 12 MONTHS THEN THE ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 28 ALLEGED GAIN/LOSS IS SHORT TERM CAPITAL GAIN/LOSS A S THE CASE MAY BE. 24. SIMILAR ISSUE HAS CAME UP BEFORE THE MUMBAI TRI BUNAL IN THE CASE OF ITO V DEEPCHAND SHAH (2011) 128 ITD 488 WHE REIN IT WAS HELD THAT IT IS NECESSARY TO TRACE CORRESPONDING PURCHASE OF SHARES FROM THE DEMAT ACCOUNT MAINTAINED BY THE BROKER IN ORDER TO VERIFY WHETHER SUCH PURCHASES OF RESPECTIVE SHARES WERE AC TUALLY MADE BY BROKER ON BEHALF OF THE ASSESSEE AND SHARES SO PURC HASED WERE CREDITED TO ITS DEMAT ACCOUNT AND WERE LYING THERE TILL SAME WERE TRANSFERRED TO DEMAT ACCOUNT OF THE ASSESSEE AFTER A PERIOD OF MORE THAN ONE YEAR. EXAMINING THE FACTS OF THE INSTANT APPEAL AND OUR DISCUSSIONS IN THE PRECEDING PARAGRAPHS ON THIS ISS UE WE ARE OF THE CONSIDERED VIEW THAT THE ALLEGED TRANSACTION CLAIME D BY THE ASSESSEE TO HAVE RESULTED INTO LONG TERM CAPITAL GA IN IS NOT SUSTAINABLE AND THE ALLEGED TRANSACTION OF EARNING INCOME OF RS.17,23,052/- SHOULD BE TAXED BY THE ASSESSING AUT HORITY TREATING IT AS SHORT TERM CAPITAL GAIN BECAUSE THE EQUITY SH ARES SOLD IN THESE TRANSACTIONS WERE HELD FOR LESS THAN 12 MONTH S AND THEREFORE THEY WERE IN THE CATEGORY OF SHORT TERM CAPITAL ASS ETS. IN THE ANNAPURNA MAHESHWARI & PRADEEP MAHESHWARI ITA NO.315/IND/2012, 252/IND/2016 & 53/IND/2014 29 RESULT GROUND NO.2 OF THE ASSESSEE IS PARTLY ALLOWE D. 25. GROUND NO.3 IS GENERAL IN NATURE WHICH NEEDS NO ADJUDICATION. 26. ACCORDINGLY APPEAL OF THE ASSESSEE IS PARTLY AL LOWED. 27. IN THE RESULT I.T.A.NO.315/IND/2012& I.T.A.NO.2 52/IND /2016 IN THE CASE OF THE ASSESSEE SMT. ANNAPURNA MAHESHWA RI IS ALLOWED AND I.T.A.NO.53/IND/2014 IN THE CASE OF SHRI PRADEE P MAHESHWARI HUF IS PARTLY ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.201 8. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 31 OCTOBER, 2018 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE